A looming legislative proposal is set to ignite a fierce contest between the Kenyan government and multinational corporations, as Laikipia County Woman Representative Jane Kihara prepares to introduce the Local Content Bill, 2025 in the National Assembly.
The proposed law seeks to overhaul entrenched procurement systems that, according to a newly released policy research report, enable the steady outflow of billions of shillings from Kenya’s economy each year.
Findings from the LCB Policy Research Report 2026 indicate that Kenya loses approximately KES 200 billion annually through what is described as “service cost leakage.” This occurs when multinational firms channel operational expenses—such as software licensing, logistics, and maintenance—through affiliated entities based abroad rather than sourcing services locally.
The report further warns that the broader economic implications are far greater. Factoring in the multiplier effect, the country is estimated to forgo up to KES 1 trillion in potential annual economic activity due to these offshore transactions.
“This revenue is already generated within the economy; the question is whether it is retained locally or exported,” the report notes, underscoring the central argument behind the proposed legislation.
Several major firms listed on the Nairobi Securities Exchange are cited as examples of the trend. Safaricom PLC reportedly transferred KES 37.1 billion to foreign entities in its FY2025 accounts, largely for platform licensing and network-related costs. East African Breweries Limited is said to channel approximately KES 20.9 billion abroad for distribution, storage, and maintenance services, while BAT Kenya directs about KES 1 billion offshore through foreign-managed logistics arrangements.
In contrast, the report highlights KCB Group as a model of domestic-focused procurement. Despite posting revenues of KES 213.8 billion, the bank sources the bulk of its operational services locally—demonstrating that global competitiveness can coexist with strong local supply chains.
The infrastructure sector emerges as another major concern, with what the report terms a “triple external drain.” Kenya frequently secures financing from foreign lenders, engages international contractors for project execution, and relies on offshore insurers for risk coverage. High-profile developments such as the Standard Gauge Railway and the Nairobi Expressway exemplify this trend. As a result, an estimated KES 50 billion in insurance premiums is remitted abroad annually—funds that could otherwise support domestic investment and reduce the cost of public borrowing.
If enacted, the Local Content Bill, 2025 will require affected companies to procure at least 60 percent of their goods and services from Kenyan enterprises, a move aimed at strengthening local industries and retaining capital within the country.
Opponents of the Bill have argued that local firms may lack the capacity to meet the standards required by multinational corporations. However, the report challenges this assertion, pointing out that Kenyan transport companies already control about 90 percent of the national trucking fleet, while the country’s technology sector continues to gain recognition as one of the most advanced in Africa.
“The capacity is present,” the report concludes. “What is missing is a regulatory framework compelling multinationals to utilize it.”
As Jane Kihara moves to formally table the Bill, attention now shifts to Parliament, where lawmakers face a pivotal decision whether to restructure Kenya’s economic framework to retain more value locally or maintain the status quo that critics say perpetuates capital flight.
